The Rising Stock Of Black Directors
Merrill Lynch & Co. (MER ) CEO E. Stanley O'Neal had barely resigned from the General Motors Corp. (GM ) board on Feb. 6 before GM began thinking about recruiting another African American to fill his slot.
Typically, a corporation like GM would look to replace him with another marquee African American name. Someone like Time Warner CEO Richard D. Parsons, who sits on the Citigroup, Estee Lauder, and Time Warner boards. But in an era of stepped-up corporate governance, CEOs are taking on fewer directorships.
That's prompting companies to broaden their reach beyond the likes of O'Neal and Parsons. As it happens, there's a large pool of black directors from which to choose. You may not have heard of these folks. But at a time when many markets are fragmenting along ethnic lines, African American directors are increasingly sought-after. According to executive recruiter Spencer Stuart, 162 black directors sit on the boards of the top 200 S&P 500 companies. That's double the number in 1987, says the Executive Leadership Council (ELC), which promotes board diversity. "A diverse board translates into a more profitable business," says Patrick G. "Pat" Ryan, executive chairman of Aon Corp. (AOC ), which has a black man, an Hispanic woman, and an Asian American woman on its board. "There's no doubt about it."
Recruiting firms such as Spencer Stuart are scouring the country to uncover African American talent. Since 2000, the recruiter has placed 277 women and 150 minority candidates on boards. Recruiters often work with Washington (D.C.)-based ELC, a rich source of largely untapped talent. Telecom giant Verizon Communications Inc. recently lured ELC member Clarence Otis Jr., the 49-year-old CEO of Darden Restaurants, to serve on its board. And Donna A. James, 48, president of the strategic investments unit of Nationwide Mutual Insurance Co., is gaining notice as a director at Coca Cola Enterprises Inc. and Limited Brands Inc. "I've seen boards look at a list in a black magazine and say, 'I want No. 32,"' says Julie Hembrock Daum, who leads Spencer Stuart's U.S. board practice. "But there are a lot of people that don't appear on those lists."
Perhaps the most prominent member of this second tier of African American directors is John W. Rogers. The founder and CEO of Ariel Capital Management, a Chicago mutual fund, Rogers was appointed to the Aon board in 1993, when he was just 35. "It was an extraordinary opportunity to learn from the best," he recalls. Today, Rogers also sits on the boards of McDonald's, Exelon, and Bally Total Fitness. Besides advising the investment and audit committees, Rogers co-hosts an annual event to train scores of black directors. "If a board doesn't have black directors to get issues on the table," he says, "it's not doing its job."
Another African American named Rogers has emerged as a director to watch. Steven Rogers, a former entrepreneur who teaches at the Kellogg School of Management, became a director at SC Johnson & Son Inc. in the late '90s. Then-CEO William Perez took a risk, since Rogers was 41 and lacked major board experience. But Perez was soon taking Rogers' advice -- for example, investing in venture capital firms that back black businesses. "It's not like I fell off the watermelon truck," says Rogers, who is also a director at SuperValu and Amcor Financial. "Boards sometimes have to go outside their normal blueprint to find people."
When Arbitron Inc. (ARB ), the radio-industry researcher, was looking for a black perspective, it made Shellye L. Archambeau a director. The CEO of San Francisco business software maker MetricStream Inc. isn't a big name. But she has operating experience and technology expertise, both skills Arbitron needed. Plus, she adds a fresh point of view about the data Arbitron produces for its minority-owned media customers. "It's important to have someone on the board [who] understands that," says Philip Guarascio, chair of the board's nominating committee. "It adds to the richness of the discussion."
By Roger O. Crockett